Roth Conversions from Trad IRA

[robertbeale]

In 2023, after meeting al my RMD requirements, I converted 15k from my Trad IRA to my Roth. This was done within the same investment company. This was reported on my 2023 Form 5498 and was included as part of my gross distribution on my 1099R. There were no questions on Turbo Tax regarding Roth conversions, so I opened Form 8606 and entered the amount there. After completing that section I was told I had a Penalty for excess contributions. I have done this in the past with no problems, How should this conversion be entered in Turbo Tax Deluxe and has my investment company provided the correct tax forms. 

[dmertz · Accepted solution]

Delete the Form 8606 and make the necessary entries in step-by-step mode.

The fact that TurboTax shows a penalty implies that you made a separate error by entering a regular contribution under Deductions & Credits.  Go back and remove anything related to the Roth conversion that you entered there.  Only regular traditional or Roth IRA contributions are to be entered there, nothing about conversions.

The Form 1099-R for the distribution that you described should have code 7 in box 7 and the IRA/SEP/SIMPLE box marked.  After entering the details of this Form 1099-R, indicate the amount that was RMD, indicate that you moved the money to another retirement account, that you did a combination of rolling over, converting and cashing out, then indicate the amount converted.  TurboTax will automatically prepare Form 8606 Part II to report the Roth conversion.

[robertbeale]

Thank you for that. I junked the original file and started over just following the questions as you suggested and everything worked fine. I tried to get to smart for my own good.